Business Opportunity: Wood biomass power generation opportunities for Finnish companies in Japan

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Business Opportunity: Wood biomass power generation opportunities in Japan

Jun 2, 2016

Renewables & smart grid

Bioproducts & materials

Bioenergy & biofuels

Japan

The Japanese government is encouraging investment in the wood biomass sector with a feed-in tariff incentive and grants for regional development and forestry revitalization.

Japan's renewable energy production has relied heavily on photovoltaics but there is now a strong government commitment and a growing business interest to expand wood biomass as an energy source.

Japan introduced a feed-in tariff for the renewable energy business in July 2012. Photovoltaics energy currently constitutes 96.4% of the total production. However, the demand for photovoltaics facilities is declining because the best locations for economically viable photovoltaics businesses have been taken. As a result, many renewable energy developers from the photovoltaics sector are now looking for business opportunities utilizing wood biomass.

Currently just 1.5% of Japan's renewable energy is generated from wood biomass, offering clear potential for future growth. In 2015, the feed-in tariff for wood biomass was set higher than for photovoltaics as the Japanese government encouraged more investment in the sector.

Public grants for bioeconomy and forestry sectors

Japan's government is offering different public grants that can boost investment and employment in the country's bioeconomy and forestry sectors, among others. Finnish companies can benefit from the grants by working with Japanese partners like renewable energy developers, local governments, lumber cooperatives and regional forest owners' cooperatives.

The "Regional revitalization promotion grants" are designed to promote a self-reliant and sustainable society by making full use of the characteristics of each region and to generate stable employment. In 2016, these grants total 769.2 M€. Japan's Forestry Agency has established "Forest & forestry revitalization foundation grants" for local governments in order to revitalize the forestry industry and exploit the country's significant forest resources. In 2016, the grants total EUR 20.8 million.

Preference for small to medium-sized biomass power plants

The grant guidelines mention the "Local production for local consumption" type of wood biomass power plant projects. This raises the vision of constructing several hundreds of kW-scale wood biomass power generators across Japan. Japanese photovoltaics developers view MW-class wood biomass power plants as too risky due to the high initial investment costs and the challenge of ensuring a stable supply of wood biomass fuels. Small and medium-sized wood biomass power plants are preferable because they can be operated by regional businesses with locally supplied wood biomass fuels.

Finnish companies can also gain recognition among the renewable energy developers as potential suppliers and deliver products directly to EPCM companies or through traders. They could also part in the business plan formulation for certain projects.

Seizing the opportunity

Existing Japanese photovoltaics developers, together with local government, regional forest owners' cooperatives and lumber cooperatives, have already started working together on small to medium-sized wood biomass power plant projects.

Finnish companies can approach these wood biomass project developers with complete solutions to fulfil the demands of regional energy business development, forest industry revitalization, and self-reliant regional wood chip production. Finnish companies can also gain recognition among the renewable energy developers as potential suppliers and deliver products directly to EPCM companies or through traders. They could also part in the business plan formulation for certain projects.

Waste to Energy and Bioenergy Growth Program is preliminarily planning a business visit to Japan during fall 2016.